The price of Nigeria’s Bonny Light crude oil has fallen by 10.6%, dropping to $73.53 per barrel from $84.02 per barrel recorded on January 15. The decline has sparked concerns over the Federal Government’s ability to meet its 2025 budget revenue target.
The 2025 budget is based on a crude oil benchmark price of $75 per barrel, an oil production target of 2.06 million barrels per day (bpd), and a total revenue projection of N36.35 trillion, with 56% expected to come from oil sales. The drop in crude oil prices signals a potential 6.6% shortfall in oil revenue, further exacerbated by Nigeria’s current oil output, which remains below the budget’s benchmark.
According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Nigeria’s crude oil production stood at 1.737 million bpd in January 2025, a slight increase from 1.667 million bpd recorded in December 2024 but still below the projected 2.06 million bpd.
Reacting to the development, Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), noted that falling energy prices could negatively affect government revenue. However, he pointed out that businesses might benefit as lower crude prices could reduce the cost of petroleum products, including petrol, diesel, and jet fuel.
Similarly, the National President of the Oil and Gas Services Providers Association of Nigeria (OGSPAN), Mazi Colman Obasi, highlighted the broader economic implications. He stated that while the decline in crude prices could hamper the execution of the 2025 budget, it could also lead to lower petroleum product prices due to reduced refining costs.
As global oil market dynamics continue to fluctuate, analysts warn that the government may need to reassess its revenue strategies to cushion the impact of declining oil prices on the national budget.
